A Stitch in Time Saves Nine – and the Reverse can be True, Too | Sharpe Group
Posted August 1st, 2008

A Stitch in Time Saves Nine – and the Reverse can be True, Too

In 2007, many fundraisers developed strategies, plans, and goals for 2008. Those plans were made against the backdrop of a record year for giving in America ($306 billion), a year when household wealth hit an all-time high ($58 trillion), along with the Dow Jones Industrial Average (at 14,165). Since then, 2008 has seen the subprime mortgage crisis trigger a broader credit crunch and other difficulties in the financial sector. The economy has slowed, causing higher unemployment. Foreclosures and bankruptcies are up, as are energy and food prices. What a difference six months can make!

Those best laid plans from last year may seem to be unraveling for some as 2008 unfolds. Just like a loose thread in a sweater, plans that now may be unraveling should be mended sooner rather than later. Remember the old saying, “A stitch in time saves nine.” Now may be an ideal time to revisit goals set earlier and make adjustments as necessary.

Past to present

Forty years ago, in 1968, The Sharpe Group suggested using a planned giving approach. The basic idea was this: segment your donor file into distinct categories, and then make sure there is a plan in place to promote various gifts to the right segments of donors. Sharpe Group founder Robert Sharpe, Sr., suggested that such efforts include not only deferred gifts but larger special gifts.

Over the past 40-plus years, we have experienced the effects of numerous periods of economic turmoil, including the recession and stagflation of the 1970s, the stock market crash in 1987, the recession of 1991, the bursting tech bubble of the late 1990s, and the aftermath of 9/11. As was pointed out in last month’s Give & Take cover story, according to Giving USA, “in a recession year, giving on average falls just 1% adjusted for inflation.” Keep in mind, though, that these were aggregate results and some programs always do better than others.

What to do today

Experience tells us that those organizations and institutions that quickly make adjustments based on prevailing economic conditions tend to do better and may actually meet or exceed their goals. Those who do nothing or impulsively reduce their fund-raising efforts across the board will likely see a drop in gifts.

Our advice is to take some time now—before you enter the critical fall giving season—to carefully review your plans. How are you doing year-to-date? Do you anticipate being subject to “across the board” budget cuts or “impoundments” in the current fiscal year? Is your fund-raising staff trained to help donors meet the challenges that seem to stand in the way of their making larger gifts? Do you have the resources to inform, educate, and motivate donors about the best ways to give in today’s environment? Do you have access to people who can help you succeed?

If you are behind on your goals, are there things you can do between now and the end of the year to close the gap? Anticipate potential budget cuts in advance and take steps to deal with them now. For example, consider leaving vacant positions open, shifting those funds to other non-personnel purposes, or outsourcing duties when it is cost effective. Make sure that your staff is trained to “salvage gifts” by suggesting alternatives. Continue your marketing and keep other lines of communication open to donors.

Make effective use of travel through multi-purpose trips. Take maximum advantage of what can be done by phone, direct mail, and the Internet. Take a colleague to lunch who has been in the field for 25 years or more and successfully weathered previous economic downturns.

As the title of this article indicates, if you make unwise cuts in your development efforts now due to an anticipated recession or other economic woes, it can often cost you more in the long run. Make your case internally with senior management and the board about the return on investment on fund-raising costs. Regardless of the overall cost, your program should be positioned as a revenue center that should continue to be adequately funded instead of an expense center.

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The publisher of Sharpe Insights is not engaged in rendering legal or tax advisory service. For advice and assistance in specific cases, the services of your own counsel should be obtained. Articles in Sharpe Insights may generally be reprinted for distribution to board members and staff of nonprofit institutions and other non-donor groups. Proper credit must be given. Call for details.

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